Categories Analysis, Technology

Micron Technology (MU) stock looks cheaper and undervalued

Investors could rejoice as Micron Technology (NASDAQ: MU) stock has turned cheaper and undervalued. The shares are expected to head higher as the earnings results are due around this month-end. The company could provide a better outlook in the future backed by improving pricing in the DRAM and NAND markets.

The investors remained curious about the company’s results as this is the chipmaker’s first set of earnings after the COVID-19 coronavirus outbreak. Semiconductor companies have been struggling with the supply-chain disruptions due to the virus outbreak. The company’s margin profile and next quarter outlook are likely to be the key watchlist for the investors.

RAM module
Image for representation. Courtesy: Harrison Broadbent on Unsplash

In the past, the company experienced weakness surrounding memory prices and seasonality. In recent weeks, the chips demand is now beginning to show signs of improvement backed by the increasing DRAM and NAND prices. The prices have started a meaningful turn higher at the end of February and early March.

The company’s future looks promising as data continues to drive the technology industry. The applications to artificial intelligence (AI), machine learning, Internet of Things (IoT), among others, are really driving the data. Micron provides what exactly data needs fast and reliable memory.

Micron has been facing stiff competition in the market. For having an edge over the rivals, the company needed technology development and manufacturing efficiency to succeed. The company has a worldwide manufacturing base. The rising manufacturing efficiency and productivity continue to drive the profitability for Micron.

For the first quarter, Micron reported an 85% dip in earnings due to a persistent slowdown in the microprocessor demand conditions. The near-term macroeconomic and trade-related uncertainties impacted the demand for microprocessors worldwide, which hurt the top line by 35%.

Read: Facebook stock turns undervalued

The stock opened lower and is trading in the red territory on Friday. The shares have risen over 12% in the past three months but it has fallen over 8% in the past month. The market remained cautious in the near-term as the performance outlook is negative for the short and medium-term despite turning positive for the long-term.

The concerns, which have been surrounding the COVID-19 outbreak, are near-term and have impacted the markets. The stocks were in red last week due to the panic selling related to the coronavirus outbreak. This has turned out to be a global pandemic due to the spread of the virus outside the China region. Biotech companies around the globe are keen on finding a cure to the virus.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

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